Wine Country vintners curious but wary of cannabis industry

(1 of )Tom Rodrigues, right, with vineyard manager Francisco Fernandez discuss when to start thinning leaves, pruning suckers and watering the vines for the first time this summer (they had over 100 inches of rain last winter) at Rodrigues' Maple Creek Winery near Yorkville, Thursday July 13, 2017. Rodrigues sits on two boards, Mendocino Winegrowers Inc. and the Mendocino Cannabis Industry Association. (Kent Porter / The Press Democrat) 2017

(4 of )Flow Kana property director Sean Quinn stands in a former Fetzer Winery tank room the Flow Cannabis Institute plans to convert into a three story marijuana drying and processing facility. (John Burgess/The Press Democrat)

(6 of )Flow Kana Chief Executive Officer Michael Steinmetz stands in the old "Big Dog Saloon" built by the Fetzer family on their flagship winery site in Redwood Valley. Flow Kana purchased the site for the Flow Cannabis Institute and will conduct marijuana tastings and seminars in the saloon. (John Burgess/The Press Democrat)

Find more in-depth cannabis news, culture and politics at EmeraldReport.com, authoritative marijuana coverage from the PD.

When Tom Rodrigues looks out the window at his Yorkville winery, he can see two worlds collide.

Some of the most coveted wines in the United States emerge from the vineyards of California’s North Coast. But in the hills overlooking his Mendocino County winery, and just to the north in California’s famed Emerald Triangle, another thriving crop is pulling millions of dollars into the region: cannabis.

Increasingly, these two worlds are bumping into each other as the state’s newly legalized cannabis industry steps out from the shadows and begins to vie openly with California’s long-established wine industry for workers, water, land and customers.

The two industries find themselves facing a common question: Are they competitors or collaborators?

The answer is complicated and depends on who you ask. Rodrigues, who straddles both worlds, sees a natural affinity between wine and weed. He farms 164 acres, devoted primarily to pinot noir, chardonnay and zinfandel. He also has used marijuana since the mid-1970s to treat glaucoma, and grows several cannabis plants for his personal use.

“Mendocino County has been growing cannabis longer than it has been known for wine,” said Rodrigues, owner of Maple Creek Winery. “Whether you like it or not, we got it here.”

He serves on the boards of Mendocino WineGrowers, a trade group for the county’s wine industry, and the Mendocino Cannabis Industry Association, which represents cannabis farmers and businesses.

Both industries seek to position their products as high-priced premium brands, not low-priced commodities, by emphasizing quality and a connection to the people and place that created them.

The region’s cannabis industry is copying many viticulture practices — from naming appellations to tracking crop tonnage — to help market its products in an increasingly crowded and competitive market for cannabis. A few local entrepreneurs are cautiously exploring business opportunities that would twin the two most profitable crops along the North Coast.

First blended symposium

Local vintners are watching the developments with great interest and some concern.

Next month, the first-ever Wine and Weed Symposium will draw 400 people to Santa Rosa to explore the impact of legal marijuana on Northern California’s two most lucrative agricultural industries. About 75 percent of registrants for the sold-out Aug. 3 event come from the wine industry, said George Christie, president and CEO of Wine Industry Network, a Healdsburg events firm sponsoring the forum.

“It’s a safe environment where they can ask the kind of questions they want. They don’t want to do this at the Emerald Cup,” said Christie, referring to the two-day celebration of marijuana culture held every December at the Sonoma County Fairgrounds, which features judging for the best marijuana flower and strain.

Most wineries, however, are casting “a wary eye” on the emerging cannabis industry, said Jean Arnold Sessions, executive director for Sonoma County Vintners, the trade group that represents 200 wineries and wine-affiliated businesses.

Rodrigues is even more blunt. “Most wineries and the wine industry are holding a big sign with marijuana and a line slashed across it,” he said.

The wine industry has a tangible reason for keeping its distance from marijuana. Wineries could lose their federal licenses to sell wine if they offer cannabis for sale or on-site consumption. Despite voters’ decision in November to legalize recreational use in California, cannabis is still illegal under federal law, which classifies it as a drug with “no currently accepted medical use” and a high potential for abuse.

Find more in-depth cannabis news, culture and politics at EmeraldReport.com, authoritative marijuana coverage from the PD.

But there is a growing realization among vintners that cannabis will have some effect on their business — no matter how they view the crop.

A defining moment occurred in February when San Francisco-based cannabis distributor Flow Kana purchased the original Fetzer winery in Redwood Valley. It plans to turn the former winery into a marijuana processing facility and destination for cannabis tourists.

As the state of California prepares to start issuing licenses for cannabis businesses on Jan. 1, local accountants and law firms that have specialized in serving wineries are ramping up to help the cannabis industry. A handful of local entrepreneurs are already beginning to offer such things as cannabis tours that include winery stops, or wine-and-weed dinners.

Christie predicts no winery will jeopardize its license to enter the cannabis business in the near future. However, he notes that risk-takers such as Robert Mondavi and Jess Jackson created the modern American wine industry, providing a model for a premium product that today’s cannabis entrepreneurs are trying to replicate.

“There is an entrepreneurial spirit that runs through the wine industry on how can we take advantage of what is happening here?” he said.

Concern of sales

The central question for wine companies is whether a legalized cannabis industry will siphon away wine consumers and weaken sales of premium wine, which have grown consistently for more than 20 years. The answer is not clear, said Gabriel Froymovich of Vineyard Financial Associates, a Healdsburg consulting firm for grape growers.

“I haven’t seen any solid evidence on it,” Froymovich said.

Early data suggests that wine consumption remains high in states with high levels of cannabis consumption, on a per capita basis, Froymovich said. He is dubious that legalization will create a large swath of new cannabis consumers in California, where it has been legal for medical purposes since 1996 and is readily accessible.

States that have previously legalized the plant have not seen a dramatic drop-off in wine consumption so far. In Colorado, which legalized cannabis for recreational use in 2014, the amount of sales taxes collected on wine has increased the past three years.

The effect on wine tourism, which is central to the North Coast wine industry, will be likely harder to gauge. Oregon has allowed cannabis sales for recreational use since October 2015. It also has a burgeoning wine tourism industry in the Willamette Valley, which is noted for its premium pinot noir and chardonnay, and has become one of the most popular places for oenophiles to visit outside California.

“I haven’t seen any negative effect,” said Adam Lee, founder of Siduri Wines of Santa Rosa, who has been sourcing grapes from Oregon for more than 20 years.

Some contend cannabis tourists could represent an opportunity for wineries, bringing in visitors who wouldn’t otherwise necessarily visit a tasting room on their North Coast trip. Emerald Country Tours will offer cannabis tours beginning this fall that will typically include a winery visit, said Brian Applegarth, founder of the Santa Rosa-based company.

“We don’t look at our tours as selling a commodity. We’re selling a region,” said Applegarth. He noted that 15 area wineries in Sonoma and Mendocino counties have expressed interest in being part of the tour, including Maple Creek.

Another company, Sonoma Cannabis Company, offers food pairings with cannabis and wine for local visitors.

The demand for such wine-cannabis tourism is likely to be region specific, Rodrigues said. Mendocino County, which is part of the premium Emerald Triangle cannabis region that includes Humboldt and Trinity counties, would likely see a greater influx of such visitors. Napa County, with its longer history of wine tourism and more affluent visitors, may be less receptive to such offerings, he said, with Sonoma County falling somewhere in the middle.

Competition for workforce

The most immediate concern for vintners, however, is the impact that a legalized and regulated cannabis industry will have on its workforce.

“Legalization will put more pressure on the employee pool,” said Jon Moramarco, a Santa Rosa wine industry consultant. “Competition for labor is already tough.”

Vineyard owners have already felt some competition from cannabis growers for field workers that harvest the North Coast’s $1.5 billion grape crop. Many cannabis growers have operated outside of state regulation, paying trimmers and field employees in cash without deductions for such items as Social Security and unemployment taxes.

But wine hospitality and administrative jobs also could be poached by marijuana businesses that are ramping up operations. Their skills can be easily transferred to local cannabis companies, which are focusing on a premium crop that borrows terminology and practices heavily from the wine world, with a focus on how the plant is affected by the area’s climate, soil and environmentally-friendly farming practices.

Garden Society, which makes low-dose cannabis-infused fruit gelées and chocolates, was founded by Erin Gore, who previously worked at her family’s boutique winery in Healdsburg, Gore Family Vineyards. All five of its employees previously worked in the wine industry, Gore said.

Other issues will linger. Wine companies will experience a tougher time finding warehouse space, which has become a notable problem in Sonoma County. Marijuana growers will now be held more accountable for their water usage in a regulated system, which could benefit vineyard owners who lived under such state regulation for decades and suffered criticism for some of their practices, Froymovich said.

Rodrigues contends that the wine industry will find ways to work with marijuana businesses as the drive for cannabis legalization grows on a nationwide level — especially if there is a change in federal law.

“We need to take away fear from the discussion,” he said. “The reality is prohibition is ending and things are changing.”

You can reach Staff Writer Bill Swindell at 707-521-5223 or bill.swindell@pressdemocrat.com. On Twitter @BillSwindell.